United States: Changes To The JOBS Act And SEC Disclosure Requirements

Last Friday, President Obama signed into law the Highway Transportation Bill, otherwise known as the FAST Act. Among its many provisions, the Act includes changes to the JOBS Act, changes to SEC disclosure requirements and a new statutory exemption for private resales of securities.

The text of the legislation is available here (under Division G—Financial Services).


The main features of the new legislation are:

  • JOBS Act Changes for Emerging Growth Company ("EGC") Initial Public Offerings: EGCs can now commence roadshows within 15 calendar days of publicly filing the registration statement with the SEC as opposed to the previous 21-calendar day waiting period and can rely on continued treatment as an EGC for certain purposes during a grace period if they lose their EGC status during the SEC review process. Further, EGCs can start the SEC review process without having to include financial information for periods that will not be required to be included at the time the IPO is expected to go on the road.
  • Form 10-K and Regulation S-K Disclosure Changes: All issuers will be allowed to submit a summary page on Form 10-K. The legislation further directs the SEC to simplify—for all filers—Regulation S-K and eliminate duplicative, overlapping or otherwise unnecessary requirements.
  • New Section 4(a)(7) Exemption for Private Resales: A new statutory exemption for private resales of restricted and control securities is now established under Section 4(a)(7) of the Securities Act. 
  • Incorporation by Reference for Smaller Reporting Companies: Smaller reporting companies will be allowed to automatically update information in a Form S-1 resale prospectus using forward incorporation of SEC reports—something only S-3 filers could utilize before.

JOBS Act Changes for EGC Initial Public Offerings

This provision:

  • Reduces the number of days that an EGC must have a registration statement publicly on file with the SEC before it may conduct a "road show" from 21 to 15 calendar days. This change is self-executing and, accordingly, is effective immediately. For example, previously an EGC had to wait three weeks after filing publicly to commence its roadshow. Now, it need only wait two weeks and a day.
  • Permits EGCs to omit financial information for earlier periods. EGC registration statements on Forms S-1 or F-1 may omit financial information for historical periods otherwise required by Regulation S-X that relate to a historical period that the EGC reasonably believes will not be required to be included at the time of the contemplated offering. Before the EGC distributes the preliminary prospectus to investors, the registration statement must be amended to include all financial information required by Regulation S-X at the date of such amendment. For example, under the new legislation an issuer that expects to market its IPO during 2016 on the basis of audited financial statements for 2015 could commence the SEC review process in 2015 or early 2016 without ever having to prepare audited financial statements for 2013. The SEC has 30 days from the date of enactment of the Act to promulgate rules effecting this change. However, issuers may omit such financial information starting on the 31st day from enactment of the Act.
  • Adds a grace period if EGC status is lost during IPO process. Under current law and SEC staff guidance, an issuer that loses its EGC status during the confidential review process will immediately lose its ability to submit amendments to its registration statement on a confidential basis. This could be the case, for example where, since the issuer's initial confidential submission, the issuer has completed a fiscal year with revenues over $1 billion and thus ceased to be an EGC. Under the new legislation, an issuer that was an EGC at the time it commenced the SEC review process for its registration statement (whether through confidential submission or public filing) but subsequently loses its EGC status will, during a grace period, still be treated as an EGC. The change is added to Section 6(e)(1) of the Securities Act relating to confidential submission and is limited to that subsection, which may affect the scope of application of the grace period. The grace period ends on the earlier of (i) the consummation of the issuer's IPO under the relevant registration statement or (ii) one year after the issuer ceased to be an EGC. This change is self-executing and, accordingly, is effective immediately.

Form 10-K and Regulation S-K Disclosure Changes

All issuers will be allowed to submit a summary page on Form 10-K but only if each item on the summary page includes a cross reference to the material in the 10-K. Such cross reference can be in the form of a hyperlink. As a matter of market practice, issuers have not generally provided "summaries" in their 10-Ks. Given that most 10-Ks are lengthy, this provision is an attempt to enable issuers to concisely disclose pertinent information in summary form and provide investors quicker access to such information. Further, this legislation also requires the SEC to eliminate redundant, outdated or otherwise unnecessary requirements of Regulation S-K for all issuers. The SEC is further directed to study the requirements of Regulation S-K and report to Congress ways to provide material information to investors but reduce costs on issuers. One such measure, as the legislation points out, is to emphasize a "company by company approach" and minimize boilerplate languages for investors. The SEC has 180 days from enactment of the Act to issue these regulations and 360 days to submit the study's findings and suggestions to Congress.

New Section 4(a)(7) Exemption for Private Resales

Private placements by issuers are exempt under Section 4(a)(2) of the Securities Act. This includes private placements to accredited investors under the SEC's Regulation D. Private placement resales by persons other than the issuer, such as holders of restricted securities or affiliates of the issuer, were not eligible for Section 4(a)(2) or Regulation D. Those resale transactions instead had to rely on the so-called Section 4(1½) exemption, a concept developed based on case law and policy considerations. It effectively permits the use of private placements for those resale transactions, subject to certain conditions. The absence of an express statutory basis created some uncertainty regarding the precise scope of the exemption. This uncertainty affected primarily secondary trading in stock of private companies. A new Section 4(a)(7) of the Securities Act now provides legal certainty. To qualify for the new exemption, the transaction must meet the following requirements:

  • Each purchaser must be an accredited investor as defined under Rule 501 of Regulation D;
  • No general solicitation or general advertising is allowed from the seller or any person acting on the seller's behalf;
  • For transactions by a non-reporting issuer, upon request by the seller, such issuer must provide the seller and prospective purchaser (and the seller must always provide the prospective purchaser) certain general information (e.g., name of the issuer, address of the issuer's principal executive offices, title and class of the security, par or stated value of the security, number of shares or total amount of the securities outstanding as of the most recent fiscal year end, etc.) and updated balance sheet and income statement financial information covering the last two fiscal years and any applicable interim periods; and
    • To the extent that the seller is a control person with respect to the issuer, a brief statement regarding the nature of the affiliation and a certification by such seller that it has no reasonable grounds to believe that the issuer is in violation of the securities laws or regulations;
  • The seller in the transaction must not be the issuer or a subsidiary (either direct or indirect) of the issuer;
  • The seller or any person that has been or will be paid remuneration or commissions for participating in the offer must not be subject to an event that would disqualify an issuer or other covered person as a "bad actor" (e.g., criminal conviction) under Rule 506(d)(1) of Regulation D or subject to a statutory disqualification described under Section 3(a)(39) of the Securities Act;
  • The issuer must be "engaged in business" and must not be in the organizational stage or in bankruptcy or receivership and must not be a blank check, blind pool or shell company;
  • The transaction must not be part of an unsold allotment to, subscription or participation by a broker or dealer as an underwriter of the security or a redistribution; and
  • The transaction must relate to a security of a class that has been authorized and outstanding for at least 90 days.

Further, the securities acquired through Section 4(a)(7) are deemed to be from a private placement, not a "distribution" for purposes of Section 2(a)(11), and are restricted under Rule 144.

As the exemption would become clearly delineated, this legislation may facilitate the development of a secondary market for private companies among accredited investors. The legislation expressly provides that Section 4(a)(7) "shall not be the exclusive means for establishing an exemption" from SEC registration. This should give market participants some comfort that the traditional Section 4(1½) exemption continues to be available, and that it is not necessary to comply with all of the requirements of Section 4(a)(7) in every resale that relies on a private placement exemption.

Incorporation by Reference for Smaller Reporting Companies

Smaller reporting companies (entities that, as of the last business day of their second fiscal quarter, have a public float of less than $75 million) will be able to automatically update information in a Form S-1 resale prospectus using forward incorporation by reference documents filed with the SEC after the S-1 registration statement becomes effective. This method of updating information was previously available only to S-3 filers. Hence, to the extent the S-1 is updated by an incorporated document instead, this new provision may not only eliminate the need for smaller reporting companies to use supplements or post-effective amendments but also allow those companies to use S-1 as an equivalent to a shelf registration statement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.